Download - In Re: v. Unanue Casal,etc., 1st Cir. (1993)
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
1/22
USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT ____________________ No. 92-2220
IN RE ULPIANO UNANUE CASAL,
Debtor,
________
GERARDO A. QUIROS LOPEZ, ET AL.,
Plaintiffs, Appellees,
v.
ULPIANO UNANUE CASAL, ET AL.,
Defendants, Appellees,
________
LILIANE UNANUE, EMPEROR EQUITIES, INC.,
Defendants, Appellants.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jos Antonio Fust , U.S. District Judge] ___________________
____________________
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
2/22
Before
Breyer, Chief Judge, ___________
Selya and Cyr,
Circuit Judges.
______________
____________________
Andr s Guillemard-Noble, with whom Harvey B. Nachman and________________________ _________________
Offices of Harvey B. Nachman were on brief for defendants, appe ____________________________
Arturo J. Garc a-Sol , with whom Dora M. Penagar cano, McC _____________________ ____________________ __ Vald s, Kelley, Sifre, Griggs & Ruiz-Suria were on brief for
____________________________________________
tiffs, appellees. Carlos Lugo Fiol, Assistant Solicitor General, Depart
_________________ Justice, with whom Reina Colon De Rodr guez, Acting Solicitor
________________________ was on brief for intervenor.
____________________
July 7, 1993 ____________________
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
3/22
CYR, Circuit Judge. Liliane Unanue ("Liliane")CYR, Circuit Judge.
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
4/22
_____________
Emperor Equities, Inc. ("Emperor") challenge the constitutio
ity of various provisional remedies imposed by a bankruptcy c
pursuant to P.R. Laws Ann. tit. 32 App. III, R.56 et seq.__ ____
lack jurisdiction over most of their claims, and find no meri
the others.
I I
BACKGROUND
BACKGROUND __________
Ulpiano Unanue Casal ("Unanue"), a former chief ex
tive officer of Goya Foods ("Goya"), filed a voluntary chapt
petition in August 1990, scheduling liabilities totaling
million and assets of nominal value. Goya, a creditor, cha
that Unanue was continuing to lead a life of luxury, trave
between seven "fabulously furnished" apartments which he
fraudulently transferred to Liliane, his wife, prior to bankr
cy. After extensive discovery, Goya moved for leave to com
an adversary proceeding, in the name and behalf of the chapt
estate, see 11 U.S.C. 503(b)(3)(B), against Liliane an___
mperor, a shell corporation apparently controlled by Lili
Although Liliane and Emperor were served with the Goya motio
July 1991, neither responded.
On August 24, 1991, Goya learned that Emperor had
one of Unanue's former condominium apartments some months ea
er, in May 1991, netting approximately $400,000. Goya pro
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
5/22
3
renewed its motion for leave to commence adversary proceedin
behalf of the chapter 7 estate, and sought an immediate ex p __
order of attachment on the apartment-sale proceeds, alleging
the proceeds were assets of the chapter 7 estate and at ris
removal from the jurisdiction. On September 4, 1991, the b
ruptcy court authorized Goya to commence an adversary procee
and issued an ex parte order of attachment under P.R. Rul__ _____
("September 4 order").1 On September 9, Goya provided ap
lants with copies of the summons, complaint, and motion
provisional remedies.
In the course of executing the writ of attachment
was discovered that Liliane had transferred most of the ap
ment-sale proceeds to a Swiss bank account. On September
1991, alarmed by the apparent removal of the sale proceeds
the jurisdiction, Goya sought additional provisional reme
under Rule 56, including "cautionary notices" and a "prohibi
against alienation" of Liliane's remaining properties in Pu
Rico, Paris, New York and Spain. After notice to Liliane
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
6/22
Emperor, and a hearing on appellants' constitutional claims,
bankruptcy court authorized the additional provisional reme
on September 26 ("September 26 orders").
____________________
1Federal Rule of Civil Procedure 64 is applicable in a sary proceedings. See Fed. R. Bankr. P. 7064. Thus, provisi ___ remedies are available in an adversary proceeding, see id. 70
___ ___ 7064, "under the circumstances and in the manner provided by
law of the state in which the district court is held," FeCiv. P. 64.
4
The September 4 and September 26 orders were appe
to the district court on the ground that the provisional reme
imposed by the bankruptcy court were unconstitutional u
Connecticut v. Doehr, 111 S. Ct. 2105 (1991). The Commonwe ___________ _____
of Puerto Rico intervened. See 28 U.S.C. 2403(b). The___
trict court upheld the challenged provisional remedies, see I
___
Unanue Casal, 144 B.R. 604 (D.P.R. 1992), and the present ap _____________
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
7/22
followed.
II II
THE SEPTEMBER 4 ORDER THE SEPTEMBER 4 ORDER
_____________________
Although the parties have not done so, we inquire
our jurisdiction to entertain the interlocutory appeal of t
parte order entered on September 4. See In re Spillane, 884_____ ___ ______________
642, 644 (1st Cir. 1989); In re Recticel Foam Corp., 859___________________________
1000, 1002 (1st Cir. 1988) ("a court has an obligation to in
sua sponte into its subject matter jurisdiction"). The court___ ______
appeals may derive jurisdiction to review a district c
appellate order in a bankruptcy case from either of two statu
sources: (1) the bankruptcy appeal provisions of 28 U.S.C
158(d); or (2) the interlocutory appeal provisions in 28 U.
1292 applicable to civil actions generally. See Connect ___ ______
Nat'l Bank v. Germain, 112 S. Ct. 1146 (1992).2 We trace t __________ _______
avenues of appeal in turn.
____________________
2Germain rejected the widely held view that 28 U.S._______
158(d) affords the only avenue of appeal from a district c appellate order in a bankruptcy case. Compare, e.g., In re
_______ ____ ____
Corp., 938 F.2d 1467, 1473 n.4 (1st Cir. 1991). _____
5
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
8/22
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
9/22
6
A. Section 158(d) A. Section 158(d) ______________
Section 158(d) affords a right of appeal to the co
of appeals from all "final decisions, judgments, orders_____
decrees" entered by district courts in bankruptcy cases. Se_
U.S.C. 158(d) (emphasis added). It is often difficult
determine what constitutes a "final" judgment or order u
section 158(d). There is somewhat less difficulty in doing s
an adversary proceeding, however, as the finality determina
in such proceedings "closely resembles [that] in 'an ordi
case [between the parties] in a district court.'" In re______
rington, No. 92-2212 (1st Cir. Apr. 26, 1993), slip op. at 4_______
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
10/22
(quoting In re Public Serv. Co., 898 F.2d 1, 2 (1st Cir. 199 ______________________
Accordingly, a district court order in an adversary proceedin
not appealable as of right under section 158(d) unless it
the entire adversary proceeding "on the merits and leaves not
for the court to do but enter the judgment." See Stringfello___ __________
Concerned Neighbors in Action, 480 U.S. 370, 375 (1987) (quo ______________________________
Catlin v. United States, 324 U.S. 229, 233 (1945)). ______ _____________
Even though a somewhat loosened standard of fina
obtains in bankruptcy appeals, on a showing of "special just
cation," see Harrington, supra, at 3, 4 n.3, the exceptions___ __________ _____
narrowly limited in order to avoid piecemeal review. Never
less, as in an ordinary civil action, the "collateral or
doctrine established in Cohen v. Beneficial Industrial Loan C _____ ___________________________
337 U.S. 541 (1949), is applicable to an appeal from an in
locutory order entered in an adversary proceeding, see I___
7
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
11/22
Martin, 817 F.2d 175, 178 (1st Cir. 1987), where the non-f ______
order is, inter alia, "effectively unreviewable on appeal fr_____ ____
final judgment," see In re Newport Sav. & Loan Assn., 928___ _________________________________
472, 474 (1st Cir. 1991) (quoting Van Cauwenberghe v. Biard,________________ _____
U.S. 517 (1988)).
On this reasoning, we must decline review of
September 4 order, as "non-final" under section 158(d).
adhere to our earlier holding that an interlocutory order al
ing an attachment to remain in place is not an appealable "
lateral order," since "'the rights of all parties can be
quately protected while the litigation on the main claim
ceeds.'" Lowell Fruit Co. v. Alexander's Market, Inc., 842________________ ________________________
567, 569 (1st Cir. 1988) (per curiam) (quoting Swift &________
Packers v. Compania Colombiana del Caribe, S.A., 339 U.S._______ _____________________________________
689 (1950)); the district court provided adequate protectio
appellants' rights in the present case by conditioning
September 4 attachment order on Goya's posting of a $50
surety bond, and there is no indication that appellants' prop
is at further significant risk or peril. Moreover, the vali
of the September 4 attachments remains subject to challen
eventual appeal from a final judgment, even if the clai
prevails. See Lowell Fruit, 842 F.2d at 570 (citing Drys S ___ _____________ _____
ping Corp. v. Freights, Sub-Freights, Charter Hire, 558___________ ______________________________________
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
12/22
1050, 1052 (2d Cir. 1977)). In the meantime, appellants
secure release of the attached property by posting a surety
of their own, see P.R. Rule 56.3, its cost presumably recover ___
8
from the claimant in the event the defendant prevails on
underlying claim. Cf. Lowell Fruit, 842 F.2d at 570 (Massa ___ ____________
setts law). Given these procedural and remedial safeguards,
present case clearly falls within the rule in Lowell Fr ________
"'[a]lthough the imposition of provisional remedies may impo
hardship an unjust hardship if the imposition is imprope
the hardship is not so substantial as to justify wasting judi
resources through piecemeal appeal.'" Id. at 569 (quo ___
Trustees of HMG v. Compania Aseguradora Inter-Americana________________ ______________________________________
Panama, 672 F.2d 250, 251 (1st Cir. 1982) (per curiam)). ______
B. Section 1292 B. Section 1292 ____________
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
13/22
We also lack jurisdiction over the September 4 o
under 28 U.S.C. 1292(a)(1), which permits interlocutory app
of district court orders "granting, continuing, modify
refusing or dissolving injunctions." Traditionally, sec
1292(a)(1) has been construed narrowly, in light of its lan
and its potential for eroding the "finality" doctrine.
e.g., Carson v. American Brands, Inc., 450 U.S. 79, 84 (19 ____ ______ ______________________
Kartell v. Blue Shield of Massachusetts, Inc., 687 F.2d 543,_______ __________________________________
(1st Cir. 1982); see also Sierra Club v. Marsh, 907 F.2d 210,___ ____ ___________ _____
(1st Cir. 1990) ("we are unwilling to adopt a more expan
reading of section 1292(a)(1) than is logically required");
generally 16 Charles A. Wright et al., Federal Practice_________ __ ___ ________________
Procedure (1977 & 1992 supp.) [hereinafter: Wright & Miller_________ ______________
3921 n.10. Thus, "[f]or historical reasons, court-or
'attachments,' even where coercive and designed to pro
9
ultimate relief, are typically considered to be 'legal,'
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
14/22
'equitable' in nature, and therefore are not 'injunctions'
1292(a)(1) purposes." Bogosian v. Woloohojian Realty Co ________ _____________________
923 F.2d 898, 901 (1st Cir. 1991); see also Wright & Mi ___ ____ ___________
3922 n.46. Moreover, where the challenged order is not
pressly captioned as an injunction, see Feinstein v. S ___ _________
Ventures, Inc., 989 F.2d 49 (1st Cir. 1993), "a litigant [ ______________
show that an interlocutory order of the district court might
a 'serious, perhaps irreparable consequence,' and that the o
can be 'effectually challenged' only by immediate appe
Carson, 450 U.S. at 84 (quoting Baltimore Contractors, Inc______ __________________________
Bodinger, 384 U.S. 176, 181 (1955)); see also Kartell, 687________ ___ ____ _______
at 551; Bogosian, 923 F.2d at 901 (noting "serious consequen ________
necessary for appealability).
In the present case, the September 4 order, capti
as an "attachment," possesses all essential characteristics o
"attachment" under Puerto Rico law: it is directed to the
Marshal, rather than appellants, and its execution subjects
attached property to the jurisdiction of the court. We conc
that the September 4 order comes within the "attachments" ex
tion to appealability under section 1292(a)(1). See Bogos ___ ____
923 F.2d at 901. Moreover, even were we to treat the Septemb
order as an "injunction" under section 1291(a)(1), appell
have not shown that the order is insusceptible of effec
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
15/22
vindication following final judgment, see Lowell Fruit, 842___ ____________
at 569-70, and therefore have not made the showing of "seri
10
perhaps irreparable consequences" required for interlocu
review. See Carson, supra; see also Navarro-Ayala v. Hernan ___ ______ _____ ___ ____ _____________ _____
Colon, 956 F.2d 348, 350 (1st Cir. 1992) ("Even if we assume_____
dubious proposition that [the challenged] order . . . coul
considered an injunction, for an injunction to be immedia
appealable it must have a 'serious, perhaps irreparable co
quence'") (citation omitted); Chronicle Pub. Co. v. Hantzis,___________________ _______
F.2d 1028, 1031 (1st Cir. 1990) ("[e]ven were the [challen
order to be deemed an injunction under 1292(a)(1), interloc
ry review would be permissible only upon a showing that the o
will have a 'serious, perhaps irreparable consequence,' and
the order can be 'effectually challenged' only by imme
appeal") (citation omitted).
C. Section 1292(b) C. Section 1292(b) _______________
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
16/22
Finally, appellants' challenge to the September 4 o
presents no occasion for interlocutory review under 28 U.
1292(b), which permits the courts of appeals to entertain
interlocutory appeal on a district court's certification "
[the challenged] order involves a controlling question of la
to which there is substantial ground for difference of opi
and that an immediate appeal from the order may materi
advance the ultimate termination of the litigation." The
trict court did not purport to certify the September 4 order
11
immediate appeal,3 and, in any case, a court of appeals may
exercise its discretion to entertain an interlocutory ap
under section 1292(b) unless the appellant requests it to
within ten days after entry of the district court order___ ____
which appeal is sought. No such timely request was made
appellants. "[T]he statute's ten-day limit is jurisdictio
which is to say that the law does not permit us to forgi
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
17/22
party's failure to comply." Rodriguez v. Banco Central, 917_________ _____________
664, 668 (1st Cir. 1990).
III
III
THE SEPTEMBER 26 ORDERS THE SEPTEMBER 26 ORDERS _______________________
The September 26 orders, authorizing the filin
"cautionary notices" against appellants' real properties,
prohibiting their alienation by appellants, present a some
closer question. On the one hand, the "cautionary notice,
creature of Puerto Rico law, is roughly analogous to the An
____________________
3The district court opinion stated: "should the bankru court's orders be deemed interlocutory, we would have gra _____ ____ leave to appeal these orders because of the important const tional issues they raise." 144 B.R. at 608, n.4 (emp added). The quoted statement appears in a footnote discussio
the district court's interlocutory appellate jurisdiction u ________ _______ 28 U.S.C. 158(a). See also 28 U.S.C. 157. In relevant p ___ ____ 158(a) states: "The district courts . . . shall have juris
tion . . ., with leave of the [district] court, from interloc ry orders and decrees[] of bankruptcy judges entered in cases
proceedings referred to the bankruptcy judges under sectionof this title." Thus, in context, the district court's foot
did not purport to be a 1292(b) certification, nor dicertify that "an immediate appeal [to the court of appeals]materially advance the ultimate termination of the litiga
. . . ." 28 U.S.C. 1292(b).
12
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
18/22
American notice of lis pendens, see Cruz La Corte v. Mo ___ _______ ___ ______________ _
Sandoz, 109 D.P.R. 354 (1980); see also Correa Sanchez v. Re ______ ___ ____ ______________ _
trar, 113 D.P.R. 581, 13 O.T. 750, 760 (1982) ("cautio ____
notice" is recorded in Registry of Property for primary pur
of subjecting property to the remedy obtained in a pending l
proceeding). Orders imposing lis pendens have been viewe___ _______
"attachments" for section 1292(a) purposes. See Rosenfel___ ________
Comprehensive Acctg. Serv. Corp., 514 F.2d 607, 609 n.2 (7th________________________________
1975) (Stevens, J.); but cf. Beefy King Int'l, Inc. v. Vei ___ ___ _______________________ __
464 F.2d 1102, 1104 (5th Cir. 1972) (per curiam) (holding
pendens analogous to injunction under Florida law). On the o _______
hand, a "prohibition against alienation" seems closely akin t
injunction; it is directed to appellants personally, enforce
by contempt, and "'designed to accord or protect, some or al
the substantive relief sought' in the action." Bogosian,________
F.2d at 901 (quoting 16 Wright & Miller 3922 at 10, 26)._______________
fact that the September 26 orders are not captioned as inj
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
19/22
tions, and that the district court and the parties consiste
treated them as attachments, is relevant but not dispositi
their appealability under section 1292(a)(1). See Manche ___ _____
Knitted Fashions, Inc. v. Amalgamated Cotton Garment & Al
_______________________ ________________________________
Industries Fund, 967 F.2d 688, 690 (1st Cir. 1992) ("we cons ________________
the substantial effect of the order . . . in deciding whethe___________ ______
appeal is available" under 1292(a)(1)) (emphasis added);
Teradyne, Inc. v. Mostek Corp., 797 F.2d 43, 47 (1st Cir. 1 ______________ ____________
(where an order has attributes of both an attachment an
13
injunction, treatment by district court and parties is "facto
be considered" for purposes of appealability). And it i
least conceivable, notwithstanding the $1 million surety
posted by Goya, that appellants might be able to assert "seri
perhaps irreparable" consequences from the prohibition on ali
tion of properties having a stated value approximating $7
lion.
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
20/22
We need not delve into the matter, however, as ap
lants' constitutional challenge to the September 26 orders
fail on the merits even if appealable under section 1292(a)
See Norton v. Mathews, 427 U.S. 524, 532 (1976) (where p ___ ______ _______
requesting dismissal based on lack of jurisdiction clearly
prevail on the merits, court may bypass close jurisdicti
question). Appellants' constitutional challenge is base
Connecticut v. Doehr, 111 S. Ct. 2105, which held that, ab ___________ _____
exigent circumstances, "[a] plaintiff's interest in attac
. . . property does not justify the burdening of [a defendan
ownership rights without a hearing to determine the likelihoo
recovery." Id. at 2115. Here, however, appellants were___
notice and a hearing prior to the issuance of the Septembe
orders. At the hearing, Goya demonstrated a reasonable "li
hood of recovery," based on (1) the dates of appellants' purc
of the various properties; (2) sudden changes in the debt
cash position around the times of these purchases; (3) ap
lants' repeated refusals to identify other sources of fundin
their acquisition of these properties; (4) appellants' appa
14
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
21/22
attempt to remove assets from the jurisdiction at about the
Goya commenced its investigation into the debtor's connec
with those assets; and (5) the debtor's apparent past involve
in appellants' financial affairs. Appellants, for their p
presented little or no rebuttal evidence, preferring to res
their right to present their case at trial. Doehr does_____
require a trial on the merits prior to the issuance of a pr
sional remedy. Appellants were afforded due process before
September 26 orders issued. See id. We therefore reserve___ ___
another day the question whether a "cautionary notice," li
with a "prohibition against alienation" of real property,
appealable as an injunction under 28 U.S.C. 1292(a)(1).
IV IV
CONCLUSION CONCLUSION __________
The appeal of the September 4 order of attachmen
dismissed for lack of jurisdiction, without prejudice to ap
lants' right to renew their constitutional challenge upon
conclusion of the pending adversary proceeding. The due pro
challenge to the September 26 orders imposing "cautionary no
es" and a "prohibition against alienation" of appellants' pro
ties is denied on the merits.
Dismissed, in part, for lack of jurisdiction; affir __________________________________________________
-
7/26/2019 In Re: v. Unanue Casal,etc., 1st Cir. (1993)
22/22
in part, on the merits. Costs to appellees and intervenor. __________________________________________________________
15